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As a result, shares issued to the donee will be subject to the holding period requirement under Rule 144. tax information Income tax return. Under limited circumstances, Form S3 may be available to cover resale of option shares by the recipient. Other Considerations. Companies considering amending options to permit transfers should also be sensitive to the financial accounting consequences of such an amendment. tax information Turbo tax download. In particular, companies should consult their auditors to determine whether such an amendment triggers a new measurement date. Amending an option to permit transfers to the employee''s family or family entities (e. g. tax information Tax-free-municipal-bonds. , family trusts or family partnerships) should not trigger a new measurement date. If a new measurement date is triggered, the company would be required to recognize compensation expense based on the difference between the option exercise price and the value of the option shares at the time of the amendment. SUMMARYThe consequences of option transfers can be uncertain. ISOs cannot be transferred and continue to qualify as ISOs, but NSOs may be transferred if the option plan permits it. Employee/donors must confront a number of complex gift and income tax concerns as well as the potential lack of marketability of the transferred option shares before deciding to pursue an option transfer. Nevertheless, in certain situations the estate planning benefits of an option transfer can be substantial and may still outweigh these disadvantages. Endnotes(1) Code '422. (2) Code '422(b)(5). (3) Code '2031. (4) Code ''421(a)(1),(c)(3). (5) Code '83(a). (6) Code '2511; Treas. Reg. '25. 2511-2(a). (7) See Rev. Rul. 80-186, 1980-2 C. B. 280. (8) Treas.
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